E-Z-GO 2011 Annual Report Download - page 70

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A summary of impaired finance receivables, excluding leveraged leases, at year end and the average recorded investment for the
year is provided below:
Recorded Investment
(In millions)
Impaired
Loans with
No Related
Allowance for
Credit Losses
Impaired
Loans with
Related
Allowance for
Credit Losses
Total
Impaired
Loans
Unpaid
Principal
Balance
Allowance
For Losses On
Impaired Loans
Average
Recorded
Investment
December 31, 2011
Aviation
$ 47
$ 92
$ 139
$ 142
$ 39
$ 146
Timeshare
170
57
227
288
38
315
Golf Mortgage
—
—
—
—
—
232
Other liquidating
3
12
15
59
9
30
Total
$ 220
$ 161
$ 381
$ 489
$ 86
$ 723
January 1, 2011
Aviation
$ 17
$ 147
$ 164
$ 165
$ 45
$ 201
Golf Equipment
—
4
4
5
2
6
Timeshare
69
355
424
459
102
426
Golf Mortgage
138
175
313
324
39
300
Other liquidating
30
16
46
104
3
79
Total
$ 254
$ 697
$ 951
$ 1,057
$ 191
$ 1,012
Loan Modifications
Troubled debt restructurings occur when we have either modified the contract terms of finance receivables held for investment for
borrowers experiencing financial difficulties or accepted a transfer of assets in full or partial satisfaction of the loan balance.
Modifications often arise in Golf Mortgage and Timeshare as a result of the lack of financing available to borrowers in these
industries. Golf Mortgage loans are typically structured with amortization periods between 20 and 30 years and contractual
maturities of between 5 and 10 years, resulting in a significant balloon payment. We modify a significant portion of these loans at,
or near the maturity date as a result of this structure. The types of modifications we typically make include extensions of the
original maturity date of the contract, extensions of revolving borrowing periods, delays in the timing of required principal
payments, deferrals of interest payments, advances to protect the value of our collateral and principal reductions contingent on full
repayment prior to the maturity date. Finance receivables held for investment that were modified during 2011 and are categorized
as troubled debt restructurings, excluding related allowances for loan losses, are summarized below:
Recorded Investment
(Dollars in millions)
Number of
Customers
Pre-
Modification
Post-
Modification
At Dec. 31,
2011
Golf Mortgage
23
$ 203
$ 191
$ —
Timeshare
10
239
199
138
At December 31, 2011, the recorded investment balance for Golf Mortgage reflects the transfer of finance receivables from held
for investment to the held for sale classification. The modifications included above resulted in a reduction in provision for losses
of $36 million due to the reversal of allowance for losses related to one significant Timeshare account, partially offset by net portfolio
losses of $15 million.
Modified finance receivables are classified as impaired loans and are evaluated on an individual basis to determine whether
reserves are required. Our reserve evaluation includes an estimate of the likelihood that the borrower will be able to perform under
the contractual terms of the modification. Subsequent payment defaults or delinquency trends of finance receivables modified as
troubled debt restructurings are also factored into the evaluation of impaired loans for reserving purposes as a default decreases the
likelihood that the borrower will be able to perform under the terms of future modifications. In 2011, we had three customer
defaults in Timeshare for finance receivables that had been modified as troubled debt restructurings within the previous twelve
months; the recorded investment for these customers totaled $113 million, excluding related allowances for doubtful accounts, at
the end of 2011.
59
Textron Inc. Annual Report • 2011 59